A bill introduced in the North Carolina House of Representatives during the 2013 session would allow individuals or corporations to sue without having to show injury if they believe that the tax policy has violated the law.

Republican Rep. Dennis Riddell, representing Alamance County in District 64, is one of several co-sponsors of House Bill 457, which was introduced on March 27. Riddell said on Wednesday that the current state laws allow individuals and corporations to sue their jurisdictions over tax policy but are required to show injury created by the policy in order to bring a case before the Wake County Superior Court.

Riddell said the proposed bill, if approved, would give individuals and corporations further standing before the court to challenge government tax policies if they believe they violate the law without having to show injury. Challenges can be made against state tax policies if they are believed to violate federal criteria and local counties’ and municipalities’ tax policies can be challenged if they are believed to violate state criteria without having to show injury.

Riddell said he supports the bill because it provides taxpayers the means to determine if a tax policy is unconstitutional.

The bill states, “An individual or corporation that pays taxes to a taxing jurisdiction of this State has standing to sue the taxing jurisdiction in the General Court of Justice on the grounds that the taxing jurisdiction has violated a constitutional provision or statute concerning appropriate methods, purposes, and amounts of taxation or expenditure by misusing or misappropriating public funds or authorizing an unlawful tax exemption, deduction or credit.”

“A plaintiff who brings an action under this Article is entitled to seek any appropriate equitable remedy, including, but not limited to, injunctive and declaratory relief. In addition, the plaintiff may obtain a judgment for the return to the jurisdiction of any money that was misused or misappropriated or a judgment for the collection of revenues owed,” the bill states.

Before filing a civil lawsuit, taxpayers are required to have their cases reviewed in prehearings at the Office of Administrative Hearings.

Riddell said he doesn’t believe the bill is designed primarily for taxpayers to challenge incentives granted by local municipalities, counties and the state but incentives could be part of the discussion. Riddell said overall, the bill provides balance for taxpayers to have standing in the court without having to show personal injury and the bill’s goal isn’t to push for excessive litigation.

The proposed bill includes a legislative fiscal note that shows what the financial impact could be on the state if the bill is approved. Riddell said there are about six lawsuits filed annually by individuals or corporations challenging local and state tax policies showing injury. It currently costs $423 for each case that is previewed by the Administrative Office of the Courts.

Page 2 of 2 - The state estimates it would cost the N.C. Department of Justice another $300,000 annually to hear the additional caseload if the bill were approved. The state would receive about $180 per case in additional revenue through court fees, according to the legislative fiscal note.

The proposed bill was referred to the House’s committee on finance on May 6. Riddell said the committee’s chairman, Republican Rep. Julia Howard representing Forsyth and Davie counties in District 79, decided to hold the bill in committee for the rest of the legislative session.

Riddell said he doesn’t know if the bill will be put up for a House vote in 2014. He will continue to support the bill during the next General Assembly session in 2014.